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Guide to the Dodd-Frank Act

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

On Sept. 15, 2008, investment bank Lehman Brothers declared bankruptcy and set off the worst financial crisis the world has seen since the Great Depression. Stock markets around the world cratered, millions of Americans lost their homes and U.S. unemployment rose as high as 10%.

In response to the crisis — sometimes called the Great Recession — Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. What has this bill done for regular consumers? This series covers the history and key provisions of Dodd-Frank, including how it impacts your everyday finances.

How does the Dodd-Frank Act regulate banks?

One of the main causes of the financial crisis was that banks made too many risky investments, especially in subprime mortgage loans. In the years leading up to 2008, large banks owed so much money to each other that if one went bankrupt, it would spread and cause other parts of the financial system to fail. These banks were in a situation where they were “too big to fail.”

The Dodd-Frank Act set up new regulations to prevent banks from getting to the point where they became too big to fail. First, the bill created the Financial Stability Oversight Council (FSOC) to monitor whether banks were taking on too much debt and putting themselves in a risky position.

If the FSOC determines that a bank is heading into dangerous territory, the council could require them to increase their reserve requirements, meaning the bank has to scale back its lending and hold on to more cash so they are less likely to go bankrupt.

Finally, Dodd-Frank required that every bank come up with a plan for a methodical shutdown should they become insolvent and find themselves unable to pay off their debts. That would help keep the problem from spreading to other financial institutions.

How does the Dodd-Frank Act help consumers?

The main goal of the Dodd-Frank act was to stabilize the banking sector so that consumers would not have to go through the pain and suffering of another financial crisis. Beyond this key mission, Dodd-Frank also set up additional protections for mortgage lending.

The financial crisis was partly caused by a subprime housing bubble. People took out mortgages they couldn’t afford, which included confusing costs like adjustable interest rates that could cause the monthly loan payment to go up.

According to David Reiling, CEO of Sunrise Banks, “Dodd-Frank mandated new mortgage loan disclosures that were designed to ensure costs were clear upfront and throughout the origination process, and also required creditors to verify income and debts to ensure a consumer could repay the loan.” As a result, shopping for a mortgage is safer and easier.

Finally, Dodd-Frank created a new regulatory agency specifically to help with consumer financial issues: the Consumer Financial Protection Bureau.

The Dodd-Frank Act created the CFPB

The mission of the CFPB is to protect American consumers in the market for financial products and services while educating them to make better decisions. They oversee consumer loans, credit and debit cards, credit card reporting agencies and payday lenders.

The CFPB does this in a few different ways. First, they help consumers research their different options, both with tools on their website and by requiring lenders to make it easier for people to compare their products. For example, mortgage lenders must give you a new disclosure explaining their fees before you sign up.

Second, the CFPB educates consumers by providing free resources on financial planning, retirement and loans. Finally, consumers can file complaints with the CFPB and they will fine companies that engage in bad practices.

To date, the CFPB has helped over 31 million consumers and returned $12.4 billion to consumers that was previously lost to companies that broke the law.

How does the Durbin Amendment impact banks?

During the negotiations for the Dodd-Frank bill, Sen. Dick Durbin (D-Ill.) sponsored an amendment to add a new regulation to the law. The Durbin Amendment set a limit to how much banks can charge for debit card transaction swipe fees.

Before the Durbin Amendment, banks were charging on average roughly 40 cents per debit card transaction. After this rule went into place, the Federal Reserve set a limit where banks could charge no more than 21 cents per transaction.

“The expectation was that the additional cost savings by the merchants would be passed on to consumers,” said Reiling. If businesses were paying less in transaction fees, they could lower their prices for American shoppers.

Need a new debit card to take advantage of the Durbin rule? These high yield checking accounts currently pay the highest interest rates.

How does the Dodd-Frank Act regulate financial markets?

Banks were far from the only cause of the financial crisis, which is why Dodd-Frank also created new rules for other parts of the market. First, the bill created the Office of Credit Rating at the SEC to oversee credit rating agencies like Standard & Poor’s and Moody’s.

These agencies review how likely creditor is to pay off a debt based on their financial situation. A company, government or investment with a AAA rating is supposed to be safer than one with a C rating. The problem was that agencies were too loose with their ratings before the financial crisis.

Brandon Renfro, Assistant Professor of Finance at East Texas Baptist University noted “A key issue in the mortgage crisis was that high credit ratings were given to derivatives of repackaged subprime loans. The goal of the new Office of Credit Rating is to reduce conflicts of interest and ensure that ratings are accurate reflections of risk.”

Dodd-Frank also launched the Volcker rule, which prohibits banks from participating in higher-risk activities like hedge funds, private equity funds and other proprietary trading. The bill created new regulations for high-risk investments called derivatives, which led to unexpectedly large losses for investors. Finally, Dodd-Frank created the Federal Insurance Office to oversee insurance companies.

The Dodd-Frank Act today

In response to the devastating losses of the Great Recession, the Obama administration used Dodd-Frank to revamp the rules for our financial markets. While the rules have some clear benefits for consumers, Dodd-Frank still has its share of critics who say it went too far: that it limits economic growth and restricts the ability of banks to lend.

This is why President Trump and the Republican party have taken steps to roll back parts of the law while still keeping the main framework in place. To see how the rules have changed, including how they helped increase credit union CD rates, check out the next part of our series.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

David Rodeck
David Rodeck |

David Rodeck is a writer at MagnifyMoney. You can email David here

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Banking

Review of the Tip Yourself App

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

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Saving money doesn’t always come naturally, even though it’s one of the best ways to stabilize your finances and live the lifestyle you want without going into debt. Apps like Tip Yourself exist to help you become a better saver.

Founded in 2015, Tip Yourself is a savings platform that allows you to reward yourself for everyday achievements by transferring money into a “Tip Jar” that serves as a savings account. It’s a clever and low-pressure way to save money and incentivize healthy, productive behaviors.

It is not the most robust or sophisticated savings tool, but it’s a great way to develop a savings mindset and consistently put money toward your goals. However, you will not earn interest on your Tip Jars, so it’s not a good long-term savings tool.

What is Tip Yourself?

Tip Yourself is a money-saving app that lets you reward yourself throughout the day when you accomplish tasks or achieve small goals. Ideally, you’ll get in the habit of saving by making incremental, consistent changes to how you manage your money. Every time you knock a loathsome task off your to-do list, you can double the dopamine hit by transferring money into your Tip Jar. You feel accomplished and save money, reinforcing two good behaviors.

A basic account is free and allows you to create up to two Tip Jars to save for different purposes. Tip Yourself Pro is the premium version, and it allows you to set up 10 jars. Those include an Automated Tip Jar and one dedicated to a savings challenge, as well as a Hidden Tip Jar to help curb spending impulses. The company earns money on Pro subscriptions and on interest accrued in users’ Tip Jars.

Your Tip Jar is linked to your checking account and is insured by the Federal Deposit Insurance Corporation up to the legal limit through Tip Yourself’s partner, nbkc bank, which holds the funds in your Tip Jar. The accounts are secured with 256-bit SSL encryption — the same protocol that’s used by banks. Once you link a checking account, you can only withdraw to that account.

Pros of the Tip Yourself app

It’s a low-cost service. You can sign up for free, and the app doesn’t charge transaction or service fees, so you never lose money on your tips. The minimum tip is $1, so there’s no reason not to save. Even Tip Yourself Pro (more below) can be affordable at $9.99 a year.

You can build good habits. By rewarding yourself for personal and professional victories, you develop a saving habit and motivate yourself to continue working toward non-financial goals as well.

It’s easy to use. The sign-up process is simple and quick, and you can familiarize yourself with the app in just a few minutes. The simplicity of the app and its features keeps the focus on saving and makes it easy to get into a routine of tipping yourself.

You can always withdraw funds. You don’t have to wait until you’ve accrued a certain amount of savings to dip into your cash. As soon as the money hits your account, you can initiate a withdrawal. There are no minimum or maximum withdrawal amounts, and you can make as many transfers as you want.

Follow inspirational posts on the social feed. The beauty of this app is that you’re rewarding yourself for good behaviors — and so is everyone else on the app. Your social feed is populated with other people sharing their life wins, such as going back to school, making time to exercise and taking care of long-overdue chores. You can also follow particular members to curate your feed. If you don’t want to share all the tips you give yourself, you can set those transactions to private, and they’ll only be visible to you.

Cons of the Tip Yourself app

Tips take several days to clear. Tip Yourself uses Automated Clearing House (ACH) transfers to move money from your bank account to your Tip Jar, a process that takes about three days to complete.

You don’t earn interest. The Tip Jar is a great place for holding money, but not for earning it. You won’t accrue any interest, no matter how long you leave the money in the account.

The social feed can be distracting. While seeing other people’s money wins can be a great motivator, having yet another social feed to scroll through can feel like a time-suck. The app defaults to showing your feed when you log in, so it’s difficult to avoid. But it’s easy to navigate to the other features, so it may not be a deal-breaker.

There’s a limit to how much you can tip. Tips are capped at $250, so if you wanted to give yourself a bonus for a job well-done, you’ll need to do so through another account. Still, the app seems to work best for small wins, so the tip cap doesn’t lessen the account’s value too much.

It’s difficult to get in touch with the company. Although Tip Yourself has an email contact button on every page, this MagnifyMoney writer reached out and did not receive a response. Two phone calls to the company’s number, which isn’t intuitive to find, went unanswered and messages were not returned. Tip Yourself’s Instagram, Facebook and Twitter accounts also seem to be updated infrequently.

How to open a Tip Yourself account

You can only sign up for an account through the app, so your first step is to download it from either Google Play or the App Store. Then you’ll need to create an account, which takes less than a minute. If you want to keep it really simple, you can sign up using your Facebook account, or you can create new credentials for Tip Yourself. In the latter case, you’ll just need to input your name, email address and a password.

Before you finalize your sign-up, you’ll need to agree to the privacy policy and terms of use. However, if you click on either one to read, the app may kick you back to the home screen where you’ll need to input your sign-up information again. The privacy policy and terms of use are linked on the website, so you can read them before signing up, but it’s a bit cumbersome if you’re unable to do so in the app.

Once you’re logged in, you’ll be prompted to link your checking account to the app. You don’t have to link accounts right away if you just want to browse the app’s features, but you’ll need to add a checking account to fund your Tip Jar. It’s best to link the account as soon as possible, because the app initiates two micro-deposits to verify your checking account, and it can take a few days for those to clear. After verification is complete, you can start tipping yourself. You’ll need your checking account to be linked and verified before you can add new Tip Jars, as well.

All users can set up a Standard Tip Jar and designate what they’re saving for and how much they want to save. Tip Yourself provides Quicktip Savings Buttons in the app, in the amounts of $2, $5 and $10, so you can easily reward yourself when you feel you deserve it. Or, you can set a higher amount if you want to kick your savings into high gear.

If you want to close a Tip Jar, perhaps because you reached your goal and no longer need it, you’ll need to move any remaining balance to another Tip Jar. You’re required to have at least one Tip Jar open at all times.

If you opt for a Pro account, you’ll be able to set up special Tip Jars, such as the Hidden Tip Jar and the Savings Challenge jar. The Savings Challenge encourages you to save $1,378 throughout the course of a year by setting up weekly tip transfers that increase incrementally. In Week 1, you tip yourself $1. In Week 2, you tip $2. In Week 3, your amount is $3 — and so on. It’s a neat way to save and to overcome the idea that you need to make massive transfers to build savings.

With the Hidden Tip Jar, you set a savings goal and tip yourself as usual, but you won’t see your balance until you’ve hit your goal. The logic is that not being able to see what you have will reduce your urge to spend before you’ve hit your savings target.

Pro users can also set up an Automated Tip Jar, which allows you to add set-and-forget tips to that account and have them transfer in on a weekly or monthly basis. If you opt for a monthly tip, you can choose whether it transfers at the beginning, middle or end of the month, so you can plan around your pay schedule. Or, you can schedule a weekly tip for yourself on the day of your choosing.

How much does Tip Yourself cost?

A basic account is free and includes two Tip Jars. Upgrading to Tip Yourself Pro will cost $9.99 a year and gives you access to 10 Tip Jars.

If you just want to build the habit of saving money generally, you’ll be fine with a free account. But if you’re the type of person who likes to create multiple funds for specific purposes, you’ll want to upgrade to the Pro option.

How Tip Yourself stacks up to the competition

You might be wondering why you’d download the app, much less pay for it, when you may be able to create multiple savings accounts with your bank.

As noted above, your Tip Jar isn’t a long-term savings account. It’s a temporary place to stash your money while you save toward specific goals. Psychologically, setting aside small amounts of money feels more doable than trying to build up your bank account.

The fact that you can reward yourself for other positive behaviors, such as going to the gym, eating healthy or finishing an assignment before your deadline, reinforces good habits in different areas of your life through small, sustainable wins.

However, Tip Yourself does seem less robust a service than, say, Digit. Also a money-saving app, Digit offers automated savings, in which the platform assesses your finances every day and transfers money into your savings accounts based on what you can afford to spare. Like Tip Yourself, Digit offers unlimited withdrawals, but it also provides overdraft protection and a 1% savings bonus after you’ve used the app to save for three consecutive months.

Digit also allows you to set however many savings goals you choose, whereas Tip Yourself limits basic users to two Tip Jars and Pro users to 10. At $5 a month, Digit is costlier than Tip Yourself, but the extra expense may be worth it for the broader range of features.

As far as app usability, the two platforms are pretty much tied. Tip Yourself’s app is rated 4.7 in the App Store and 4.4 on Google Play. Digit’s App Store ranking is also 4.7, while its Android rating is nearly on par at 4.3.

The bottom line: Is the Tip Yourself app worth it?

If you struggle with saving money or budgeting for things such as vacations, holiday gifts or just a general rainy day fund, Tip Yourself is a good tool for establishing the habit. By linking everyday accomplishments with tipping yourself, you make saving part of your routine. You also reduce the stress of money management by saving toward specific goals.

It seems to work best for smaller-scale goals rather than major expenses, and you won’t find a full suite of budgeting or money management features here. However, the low cost and ease of use make Tip Yourself an accessible, helpful app for saving on your own terms and beginning to take control of your spending.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Casey Hynes
Casey Hynes |

Casey Hynes is a writer at MagnifyMoney. You can email Casey here

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Banking

Review of Moven: A Mobile Bank Account

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

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Founded in 2011, Moven is a fintech company that attempts to use immediate prompts, such as spending reviews each time you make a purchase, to positively impact its users’ financial habits.

It is not a bank itself, but Moven partners with CBW Bank to offer users prepaid cards. These cards act similarly to many cash management accounts, sans any interest.

If you’re looking for a high return on the money in your checking account, look elsewhere. But if you’re looking for an app that could potentially alter your spending habits for the better, you may want to give Moven a closer look.

What does Moven offer?

You can use Moven through your existing bank account or as a fully functional prepaid account that offers direct deposit of your paycheck.

As you spend and save, Moven will learn your money habits. From there, it will anticipate spending across categories such as groceries, transportation and dining. This will be tracked on your Spending Meter, which will track your spending progress within each category.

Every time you make a purchase, the Moven app will show you how you’re doing according to the anticipated budget. If the Spending Meter is green, you’re doing all right. If it’s yellow, you are approaching your expected spending. But if it’s red, you know you need to address your spending as soon as possible. Moven also looks at your daily spending in general and will give you color-coded information on spending spikes throughout the month.

If you have short-term savings goals, Moven provides a feature called “Moven Stash” where you can put this money aside until you need it for rent, a road trip or whatever your goal may be. It won’t earn any interest.

Moven debit account

The Moven account comes with a debit card and the ability to issue checks, albeit electronically. (Checks can be written for between $10 and $4,000.) This account does not pay interest, but it is insured by the Federal Deposit Insurance Corporation up to the legal limit.

The most complicated part of this account is its loading limits. If you are getting your paycheck deposited directly into your Moven account, there is no limit on how much you can deposit at once. However, there are maximums — and minimums — on other methods of account funding.

When you initially open your account, you must deposit between $50 and $500. Every time you reload your card, you must add between $10 and $2,500 for Automated Clearing House (ACH) transfers other than paychecks that are deposited directly. If that ACH transfer is coming from another bank, it will be limited to $1,000. If you’re doing a card-to-card transfer, you must stay between $10 and $750. The maximum you can load through Moven in a month is $10,000 (again, direct deposit paychecks are an exception).

You may also choose to make deposits via cash at convenience stores in the MasterCard rePower network. Moven does not charge a fee for this type of deposit, but the MasterCard rePower location will. Your funds will be available immediately.

Finally, you can deposit checks via your phone using the Ingo app. The standard fee for cashing a check with Ingo is $5. Depending on how many checks you cash a month and the type of check (personal, payroll or government), fees for checks beyond $125 to $500 vary from 1% to 5%. If you can wait 10 days to access your funds, the fee will be waived.

Daily ATM withdrawals are capped at $500, while total daily spending is limited to $10,000. You will not run into any overdraft fees since Moven will not approve a purchase if there are insufficient funds in your account. It’s impossible to overdraw.

Moven budgeting and spending tools

To figure out if your Spending Meter should display green, yellow or red, Moven projects your spending. It does this by averaging your past spending by category. That means the longer you have your account, the more accurate the average will be. By the same token, the longer you use your account, the less impact a particularly good or bad month will have on your average.

In addition to the color-coded notifications and Moven’s algorithm that learns to predict your projected spending, the Stash feature allows you to budget. You can set expenses as milestones, whether they’re mundane things, such as a utility bill, or once-in-a-lifetime expenses, such as your best friend’s baby shower. By scheduling these, you can ensure you’ve budgeted for both expenses ahead of time.

How much does Moven cost?

Moven doesn’t charge many of the fees you usually see, such as maintenance or overdraft fees. But some of its fees are not as common elsewhere.

Let’s take the account closure fee, for example, which is not a fee you find on all checking accounts. You’ll pay $10 at Moven to shut your account.

While Moven doesn’t charge any ATM fees when you use the STAR network, you may incur a fee if you use an ATM outside of this network. The fee would be charged by the out-of-network ATM owner. The STAR network has over 40,000 surcharge-free ATMs across the country, so finding one might not be difficult.

Moven doesn’t charge to replace your card — at least not the first two times a year. If you lose your card more often than that, the fee is $4.99 for each subsequent incident. If you want expedited shipping on your replacement card, there is a $30 fee.

Moven is not a great account to use if you’re traveling internationally or to an area where U.S. dollars aren’t accepted. Moven has several fees on these transactions, and they can compound.

First, you’ll have to pay an EFT fee of 1% every time you use your Moven account outside of the U.S. If you’re using an international ATM, you’ll have to pay an additional 1% fee.

Regardless of how you’re accessing your Moven account, you will also have to pay a 3% currency exchange fee when you are charged in a currency different than U.S. dollars. That means that if you’re making an international transaction, the fees could be 1% if there’s no currency conversion. Otherwise, it’d be 4%.

Here’s a breakdown of Moven’s fees:

Moven Fees
Monthly feeNone
Maintenance feeNone
Overdraft feeNone
ATM feesNone, unless charged by an out-of-network ATM owner
International ATM withdrawal fee1%
Card replacement fee2 free replacements per year; each subsequent replacement is $4.99
Paper statement fee*$5
Expedited shipping on card replacement$30
Account closure fee $10
EFT surcharge1%
Currency conversion fee3%
*Statement will only be printed upon request. Fees accurate as of October 4, 2019.

The Moven mobile app experience

Moven’s mobile app is the entire reason to get an account. The app notifies you of where you stand with your money in real time, creating an immediate prompt that can help you modify your behavior. At any point, you can check your spending and see if you’re in red, yellow or green, curbing your purchases as necessary.

The app doesn’t just track the money in your Moven account, either. While one reason to link your personal banking account to Moven is to establish a funding source, another is that the app can track all of the spending on your linked accounts. It can also track credit card spending, though you cannot fund your Moven account with a credit card.

The app will split your expenditures into three categories: wants, needs and other. The wants category includes line items such as travel, dining and entertainment. Needs are things such as rent, utilities and health care expenses. In the other category, you’ll have miscellaneous line items such as gifts, business expenses and account transfers.

This gives you a holistic picture of your spending habits, income flow and how you can improve your money habits. In fact, you don’t have to open an account with Moven at all. You can use the app to track your spending with accounts you already have with other financial institutions — if you want to go that route.

As with other mobile-only apps, you don’t have a branch you can visit if you have any banking-related questions, so keep that in mind as you compare your options.

How to open a Moven account

To use Moven, you must be a U.S. citizen aged 18 or older with a Social Security number. You need a mobile device that runs on Android 4.1 or above, or iOS 8 or above.

While you can easily and quickly create your Moven profile via desktop, you will need to download the app via the App Store or Google Play to use all the features. If you do decide to use the account to track your spending in real time with the Spending Meter, it will take seven to 10 business days to receive your card.

If you need assistance during the process, you can get in touch with Moven via email or phone.

The pros and cons of Moven

Pros

  • Immediate spending alerts serve as reminders to adjust your money habits
  • You can link external accounts, potentially allowing you to track all your spending
  • No maintenance, overdraft or domestic ATM fees charged by Moven
  • Easy to open an account and use the app

Cons

  • No interest
  • Requirements for minimum and maximum deposits
  • Numerous fees for international travelers
  • Can deposit cash, but you will pay a fee
  • Fee charged to close your account

Who should use Moven?

If you’re trying to change your spending habits, Moven can provide reinforcement. These behavioral goals are what would motivate the ideal user to download the app.

If you’re attempting to earn interest on your savings, access financial charting tools that allow you to incorporate your retirement savings or other investments or handle a lot of cash, this account is likely not a great fit for you.

This is even truer if you travel internationally regularly or you’re planning an extended stint abroad. While you’re outside the U.S., you will get hit with fees every time you spend money.

Moven isn’t a great place to grow your cash, but it can be a great way to modify undesirable spending habits in real time.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Brynne Conroy
Brynne Conroy |

Brynne Conroy is a writer at MagnifyMoney. You can email Brynne here